The eight sales commission structure examples that cover almost every B2B team are base salary plus commission, straight commission, flat-rate commission, tiered commission, revenue commission, gross margin commission, quota-based commission with accelerators, and draw against commission. The right one depends on what you want reps to do: win new logos, protect margin, expand accounts or ramp quickly.
TL;DR: Start from the behavior you want, not the formula. Base plus commission suits most B2B teams with long cycles. Tiered and accelerator plans reward overperformance. Gross margin commission protects pricing. Draws help new reps through ramp. Keep any plan to two or three measures, model it at 50%, 100% and 150% of quota before launch, and write the payout rules down.
A commission plan is a message. It tells reps which deals the company values and how hard to push for them. Get the structure right and reps chase the right business without being told. Get it wrong and you pay for behavior you did not want: discounted deals, sandbagged quarters, or a pipeline full of small, easy wins.
Each example below includes the formula, a worked example with illustrative numbers, when it fits, and what to watch for.
1. Base Salary Plus Commission
The most common structure in B2B sales. Reps earn a fixed base salary plus a variable commission on what they close. The split between the two is the pay mix, often written as base/variable (for example 50/50 or 60/40), and the total at 100% of quota is on-target earnings (OTE).
Formula: Total pay = base salary + (commission rate x eligible sales)
Worked example: An AE has a $90,000 base and $90,000 variable at a $900,000 annual quota, so the effective commission rate is 10%. Closing $1,000,000 earns $90,000 + (10% x $1,000,000) = $190,000. (This plan has no accelerator; see example 7 for one.)
When it fits: Long sales cycles, complex deals, and roles where reps also do non-selling work such as account management or implementation support. The base gives stability through slow quarters.
Watch for: A pay mix that leans too heavily on base can dull urgency. Match the mix to how much the rep's own effort drives the outcome: more variable for hunters, more base for account managers and technical sellers.
2. Straight Commission (Commission Only)
Reps earn only commission, with no base salary. Pay rises and falls entirely with results.
Formula: Total pay = commission rate x eligible sales
Worked example: At a 20% rate, a rep who closes $400,000 earns $80,000. A rep who closes $150,000 earns $30,000.
When it fits: Short, transactional cycles, independent agents and channel partners, and businesses that need sales cost to scale exactly with revenue.
Watch for: Pressure to close anything, including bad-fit customers, and high turnover when pipeline dries up. Check local minimum-wage and employment rules before using a commission-only plan for employees. It is a poor fit for complex B2B deals that take months to close.
“Consolidation of prospect company information that I can use frequently to be way better informed when I'm doing my outbound, preparing for a meeting, or building relationships. Ease of use and Customer Support is excellent.”
Werner Schmidt
CEO & Co-Founder, Lative
3. Flat-Rate Commission
Every sale pays the same fixed amount or the same percentage, regardless of volume.
Formula: Commission = fixed amount per sale, or fixed % x deal value
Worked example: An SDR earns $150 for every qualified meeting that converts into an opportunity. Twenty in a month pays $3,000. Or an AE earns a flat 8% on every deal: a $40,000 deal pays $3,200.
When it fits: Simple products, uniform deal sizes, and SDR plans built around meetings or opportunities rather than revenue.
Watch for: No extra reward for overperformance, so top reps may coast once they hit a comfortable income. Pair it with a quarterly bonus or a SPIFF if you need more push.
4. Tiered Commission
The commission rate rises as the rep passes defined attainment levels. Each tier's rate applies to the sales within that band.
Formula: Commission = sum of (tier rate x sales within each tier)
Worked example: With a $500,000 quota, a plan pays 5% on the first $250,000, 10% from $250,000 to $500,000, and 15% above quota. A rep who closes $600,000 earns (5% x $250,000) + (10% x $250,000) + (15% x $100,000) = $12,500 + $25,000 + $15,000 = $52,500.
When it fits: Teams that want to reward consistent overperformance and keep top reps pushing late in the period.
Watch for: Sandbagging, where reps hold deals back to land them in a higher tier next period. Reset tiers at sensible intervals and look at deal timing around period ends.
“This is my singular place that very simply summarizes a company's top initiatives, strategies and connects them to my solution. Something I would spend hours researching manually, now it's automated.”
Derek Rosen
Director, Strategic Accounts, Guild Education
5. Revenue Commission
Commission is a percentage of the revenue each deal generates, typically the first-year contract value or annual recurring revenue (ARR) for subscription businesses.
Formula: Commission = commission rate x deal revenue (or first-year ARR)
Worked example: At 10% of first-year ARR, a three-year deal worth $60,000 a year pays $6,000. Some plans pay a smaller percentage on later contract years, for example 10% on year one and 3% on years two and three, which would pay $6,000 + $1,800 + $1,800 = $9,600.
When it fits: Most SaaS and recurring-revenue businesses, because it ties pay directly to booked revenue and is easy for reps to calculate.
Watch for: Reps discounting to close, since a discount barely dents their payout but cuts company margin. Pair it with discount approvals or move to gross margin commission (next).
6. Gross Margin Commission
Commission is calculated on gross profit rather than revenue, so reps share in the margin they protect.
Formula: Commission = commission rate x (deal revenue − cost of goods sold)
Worked example: A $100,000 deal has $40,000 of delivery cost, leaving $60,000 gross margin. At 15% of margin, the rep earns $9,000. If the rep discounts the deal to $85,000 with the same cost, margin falls to $45,000 and commission to $6,750.
When it fits: Businesses with variable costs, services or hardware components, and teams where reps control pricing.
Watch for: Reps need visibility into cost to trust the plan. Publish the margin calculation and keep it simple, or the plan becomes a constant source of disputes.
7. Quota-Based Commission With Accelerators
Reps earn a base rate until they hit quota, then a higher rate (an accelerator, or multiplier) on everything above it. Some plans also use decelerators, a lower rate below a threshold such as 50% of quota.
Formula: Commission = (base rate x sales up to quota) + (base rate x multiplier x sales above quota)
Worked example: A rep with a $1,000,000 quota earns 10% up to quota and a 1.5x multiplier (15%) above it. Closing $1,300,000 pays (10% x $1,000,000) + (15% x $300,000) = $100,000 + $45,000 = $145,000.
When it fits: Most B2B sales teams with clear quotas. Accelerators are the simplest way to make overperformance worth chasing.
Watch for: Quotas set too low make accelerators expensive; quotas set too high make them irrelevant. Base quotas on territory potential and history (see sales territory management), and decide in advance whether accelerators are capped.
8. Draw Against Commission
The company advances the rep a guaranteed amount (the draw) each pay period, then deducts it from commissions earned. A recoverable draw must be paid back from future commissions if earnings fall short; a non-recoverable draw does not.
Formula: Payout = greater of (draw, commission earned); with a recoverable draw, any shortfall is carried forward against future commission.
Worked example: A new rep has a $4,000 monthly recoverable draw. In month one they earn $2,500 in commission and are paid $4,000, carrying a $1,500 deficit. In month two they earn $7,000; the company pays $7,000 − $1,500 = $5,500 and the deficit is cleared.
When it fits: Ramping new hires, commission-heavy plans, and seasonal businesses where income would otherwise swing sharply.
Watch for: Recoverable draws that pile up into a deficit the rep can never clear. That is a fast route to attrition. Set a time limit on recovery and review it during ramp.
Sales Commission Structures Compared
| Structure | Best for | Main advantage | Main risk |
|---|---|---|---|
| Base plus commission | Most B2B teams, long cycles | Stability plus incentive | Too much base dulls urgency |
| Straight commission | Transactional sales, agents | Cost scales with revenue | Short-termism, turnover |
| Flat-rate | Simple products, SDR meeting plans | Easy to understand | No reward for overperformance |
| Tiered | Teams that reward overperformance | Keeps top reps pushing | Sandbagging between periods |
| Revenue | SaaS and recurring revenue | Ties pay to bookings | Encourages discounting |
| Gross margin | Variable-cost products, pricing control | Protects margin | Needs cost transparency |
| Quota with accelerators | Teams with clear quotas | Makes overperformance pay | Quota-setting errors get expensive |
| Draw against commission | Ramping reps, commission-heavy plans | Smooths income | Deficits that never clear |
How to Choose the Right Commission Structure
Most teams end up with a hybrid: base plus commission, a revenue or margin basis, and accelerators above quota. Use these steps to design yours.
- Start from the behavior you want. New logos, multi-year contracts, margin, expansion revenue or a new product? Pick the one or two outcomes the plan should drive, and tie them to the sales goals for the period.
- Keep it to two or three measures. If a rep needs a spreadsheet to work out what a deal pays, the plan stops steering behavior.
- Model it before you launch. Run payouts at 50%, 100% and 150% of quota for a few real rep profiles, and check the cost of sales at each level.
- Match the mix to the role. Hunters on short cycles can carry more variable pay; account managers and technical sellers usually need more base.
- Write the rules down. Crediting on split deals, clawbacks for early churn, payout timing and what happens to deals in flight when someone leaves all belong in the plan document. Sales operations usually owns this, as covered in sales operations roles and responsibilities.
- Review it once a year, not mid-year. Changing plans mid-period erodes trust. Use the annual review to fix what the numbers show.
Key Insight: A commission plan only motivates if reps can see a clear line from the deals in front of them to their payout. Clarity beats cleverness.
Commission is only half the equation. Reps hit plan when they spend their time on accounts that are ready to buy, which is why sales rep productivity and good sales manager strategies matter as much as the rate card.
Key Takeaways
- Choose a commission structure by the behavior you want to reward, then pick the formula.
- Base plus commission is the default for B2B teams with long cycles; add accelerators to make overperformance worth chasing.
- Gross margin commission protects pricing where reps control discounts; revenue commission is simpler but needs discount controls.
- Draws help new reps through ramp, but cap and review recoverable deficits.
- Model every plan at 50%, 100% and 150% of quota and write the rules down before launch.
Frequently Asked Questions
What is the most common sales commission structure?
Base salary plus commission is the most common structure for B2B sales teams. It gives reps a stable income through long sales cycles while still tying a meaningful share of pay to results. Many teams add accelerators above quota to reward overperformance.
What is a good commission rate for B2B sales?
There is no single right rate. It depends on deal size, sales cycle, the base/variable split and how much of the deal the rep sources. A practical way to set it is to divide the variable pay at target by the quota: $90,000 of variable pay on a $900,000 quota is a 10% effective rate.
What is the difference between tiered commission and accelerators?
Tiered commission raises the rate across several attainment bands, with each rate applying to the sales inside its band. An accelerator is usually a single higher rate (or multiplier) applied to everything above quota. In practice they overlap; an accelerator is a tiered plan with one tier above 100%.
What is a draw against commission?
A draw is an advance paid to a rep each period, deducted from commissions they earn. A recoverable draw must be repaid from future commissions if earnings fall short; a non-recoverable draw does not. Draws are most common for new reps during ramp.
How often should a commission plan change?
Review it once a year as part of annual planning, and avoid changing it mid-year unless something is clearly broken. Frequent changes erode trust and make it hard for reps to plan their pipeline.
Commission plans reward results; Salesmotion's agents help reps find them, with live buying signals and account briefs that point each rep to the accounts most likely to close this quarter.
